Key Points
- A federal judge paused the antitrust lawsuit between Cumulus Media and Nielsen after Cumulus filed for Chapter 11 bankruptcy.
- The ruling halts both Nielsen’s counterclaims and Cumulus’s antitrust claims while the broadcaster’s restructuring proceeds.
- Cumulus accused Nielsen of tying national radio ratings to local measurement services, a claim currently under appeal.
A federal judge has temporarily halted an antitrust lawsuit between radio broadcaster Cumulus Media and audience measurement firm Nielsen following Cumulus’s filing for Chapter 11 bankruptcy protection earlier this month.
U.S. District Judge Jeannette A. Vargas ordered the stay of the case in the Southern District of New York roughly one week after Cumulus initiated a prepackaged bankruptcy restructuring in the Southern District of Texas.
The ruling pauses both Nielsen’s counterclaims against Cumulus and the broadcaster’s own antitrust claims against the ratings company while the bankruptcy proceedings move forward.
Under federal bankruptcy law, claims brought against a company that has filed for Chapter 11 are automatically halted through an “automatic stay,” a provision designed to preserve the debtor’s assets and prevent competing legal actions from proceeding simultaneously. That provision immediately suspended Nielsen’s counterclaims against Cumulus.
Judge Vargas also exercised her discretion to stay Cumulus’s antitrust lawsuit against Nielsen, even though the Bankruptcy Code does not require courts to pause claims initiated by the debtor itself. Cumulus consented to the move, which the court said would help avoid duplicative legal proceedings during the restructuring process.
The underlying dispute began in October, when Cumulus filed an antitrust complaint accusing Nielsen of unlawfully tying the sale of its national radio audience measurement data to the purchase of its local ratings services.
Cumulus argued that the practice limited competition and forced radio companies to buy bundled measurement products. After a three-day evidentiary hearing in December, Judge Vargas granted Cumulus a preliminary injunction, finding the company had demonstrated a substantial likelihood of success on its antitrust claims.
Nielsen subsequently appealed that decision to the U.S. Court of Appeals for the Second Circuit, which granted a stay of the injunction while the appeal is considered. That appellate proceeding remains active and is not affected by the bankruptcy stay.
In February, Nielsen filed counterclaims against Cumulus alleging breach of contract and unfair competition. The claims center on an email in which Cumulus Chief Insights Officer Pierre Bouvard allegedly shared Nielsen ratings data with rival measurement firm Eastlan Ratings.
Cumulus moved to dismiss the counterclaims on March 4, the same day it filed for Chapter 11 protection.
Court filings associated with the bankruptcy list Nielsen as a creditor with a disputed claim of approximately $3.8 million.
As part of the restructuring process, Cumulus’s antitrust claims against Nielsen are now considered an asset of the bankruptcy estate. Any potential financial recovery would therefore go to the company’s incoming creditor-owners rather than existing shareholders, whose equity interests are expected to be eliminated under the restructuring plan.
The company’s lenders are expected to take control of Cumulus once the plan becomes effective and will determine whether and how the litigation proceeds after the bankruptcy stay is lifted. The transition will also bring a new board of directors, as all current Cumulus directors are expected to step down when the reorganization is finalized.
For now, the lawsuit will remain paused while the broadcaster continues its bankruptcy proceedings before U.S. Bankruptcy Judge Alfredo R. Perez in Houston.
Judge Vargas ordered the parties to file a joint status update by June 9, with additional updates every ninety days thereafter while the stay remains in effect.
